Goldman Sachs Bets Bitcoin And Crypto Are Poised For Epic Fed U-Swing After $200B Ethereum, BNB, XRP, Cardano, Dogecoin, Polygon, Solana Price Boom
03/20 update below. This post was originally published on March 19
BitcoinBTC, ethereum and other major cryptocurrencies have seen a $200 billion boom in the past two weeks – sparking a shock price prediction for bitcoin prices.
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Bitcoin price has come within touching distance of $28,000 per bitcoin, the highest since last summer. The Bitcoin price rally has also boosted the ethereum price and other top ten cryptocurrencies BNBBNB, XRPXRP, cardano, dogecoin, polygon and solana.
Now, after nearly 200 US banks were found to be dealing with similar pressures to the collapsed Silicon Valley Bank (SVBVB), the US central bank is under pressure to ease its anti-inflation rate hike program – which could push bitcoin price and the crypto market even higher.
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“As if they didn’t have enough to contend with in the face of fighting inflation on the one hand and staving off recession on the other, central banks must now confront SVB’s failure and any wider implications that has for the banking system, given that higher interest rates have played some role in pressuring the bank’s customers and ultimately the bank itself,” Russ Mould, chief investment officer at brokerage AJ Bell, said in an emailed statement.
“We want to find out how disturbed officials are – if indeed they are disturbed at all.”
03/20 update: Goldman Sachs analyst David Mericle has predicted that the Federal Reserve will leave interest rates where they are when the Federal Open Market Committee (FOMC) meets this week. “While policymakers have responded aggressively to shore up the financial system, markets appear to be less than fully convinced that efforts to support small and medium-sized banks will prove sufficient,” Mericle wrote in a note to clients seen by Marketwatchadding the link between a single quarterly increase and future inflation is “very weak.”
The Fed’s two-day policy meeting begins on Tuesday with the announcement followed by a press conference for Fed Chair Jerome Powell on Wednesday.
Traders now expect the Fed to raise interest rates by just a quarter of a percentage point next week before quickly reversing course and cutting rates later this year.
The shock collapse of SVB last week, as well as the closure of crypto-friendly Signature Bank, sparked fears that other banks could suffer a similar fate. Economists wrote in a study this week that 186 banks across the country may be exposed to similar risks as SVB. Troubled First Republic Bank was extended a lifeline by nearly a dozen of its larger rivals to stave off implosion.
Bitcoin price has fallen sharply over the past year as the Fed raised interest rates at a historic pace to reduce skyrocketing inflation – wiping about $2 trillion from the combined price of ethereum, BNB, XRP, cardano, dogecoin, polygon, solana .
The Fed’s response to the SVB-led banking crisis has raised expectations. The Fed is poised to reverse course and has already restarted quantitative easing – which some fear could trigger US dollar hyperinflation and the eventual collapse of the entire financial system.
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“Concerns stemming from a series of US bank closures have subsided thanks to the Fed’s help, and now, with their balance sheet expanded by around $300 billion in a week, the market wants an effective end to the Fed’s quantitative easing,” Yuya Hasegawa, crypto market analyst at Tokyo -based Bitbank, wrote in an email message – pointing to bitcoin’s recent rally as potentially signaling the beginning of a new bull market.
“Although Treasury yields have rebounded due to slowing gigs for the economy, leaving some room for the Fed to continue raising interest rates. However, the reversal in stock market sentiment has improved risk appetite, and that could boost the price of bitcoin further on short term.”
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